logo     Print Page | Close Window

SEC Filings

10-Q
EQUINIX INC filed this Form 10-Q on 05/03/2019
Entire Document
 
EQUINIX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

For the Metronode Acquisition, the adjustments made from the provisional amounts reported as of June 30, 2018 primarily resulted in a decrease in property, plant and equipment, other assets, other liabilities and deferred tax assets of $10.1 million, $10.0 million, $9.7 million and $4.1 million, respectively, and an increase in goodwill, intangible assets and deferred tax liabilities of $41.6 million, $4.8 million and $31.3 million, respectively. The adjustments for the Infomart Dallas Acquisition made from the provisional amounts reported as of June 30, 2018 primarily resulted in a decrease in goodwill of $6.2 million and an increase in intangible assets of $4.6 million. The changes in fair value of acquired assets and liabilities assumed did not have a significant impact on the Company's results of operations for any reporting periods prior to March 31, 2019.
A summary of the final allocation of total purchase consideration is presented as follows (in thousands):
 
Metronode
 
Infomart Dallas
Cash and cash equivalents
$
3,206

 
$
17,432

Accounts receivable
8,318

 
637

Other current assets
9,421

 
395

Property, plant, and equipment
297,092

 
362,023

Intangible assets
128,229

 
65,847

Goodwill
410,188

 
197,378

Other assets (1)
44,373

 

Total assets acquired
900,827

 
643,712

Accounts payable and accrued liabilities
(17,104
)
 
(5,056
)
Other current liabilities
(2,038
)
 
(2,141
)
Deferred tax liabilities
(31,281
)
 

Other liabilities (1)
(45,851
)
 
(4,723
)
Net assets acquired
$
804,553

 
$
631,792

 
(1) 
In connection with the Metronode Acquisition, the Company recorded indemnification assets of $44.4 million, which represented the seller's obligation under the purchase agreement to reimburse pre-acquisition tax liabilities settled after the acquisition.
The following table presents certain information on the acquired intangible assets (in thousands):
Intangible Assets
 
Fair Value
 
Estimated Useful Lives (Years)
 
Weighted-average Estimated Useful Lives (Years)
Customer relationships (Metronode)
 
$
128,229

 
20.0
 
20.0
Customer relationships (Infomart Dallas)
 
35,860

 
20.0
 
20.0
In-place leases (Infomart Dallas)
 
19,960

 
3.6 - 7.5
 
6.8
Trade names (Infomart Dallas)
 
9,552

 
20.0
 
20.0
Favorable leases (Infomart Dallas)
 
475

 
3.6 - 7.5
 
7.0
The fair value of customer relationships was estimated by applying an income approach, by calculating the present value of estimated future operating cash flows generated from existing customers less costs to realize the revenue. The Company applied discount rates of 7.3% for Metronode and 8.2% for Infomart Dallas, which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows. Other assumptions used to estimate the fair value of customer relationships included projected revenue growth, probability of renewal, customer attrition rates and operating margins. The fair value of Infomart Dallas' trade name was estimated using the relief from royalty approach. The Company applied a relief from royalty rate of 1.5% and a discount rate of 8.2%. The fair value of in-place leases was estimated by projecting the avoided costs, such as the cost of originating the acquired in-place leases, during a typical lease up period. The fair value measurements were based on significant inputs that are not observable in the market and thus represent Level 3 measurements as defined in the accounting standard for fair value measurements.

13